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Essay: New Look market analysis

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  • New Look market analysis
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Founded by Tom Singh in 1969 as a single fashion store, New Look became a leading fast – fashion brand, with its 593 stores in the UK and 302 across Europe, China and Asia. The brand boasts more than 5 million followers on social media (1,9 million on Instagram and 3,2 million on Facebook). Its intention is helping people dressing smartly for cheap prices (New Look, s.d.).

This proposal will be sectionalised to cover initially a critically inclined examination of the market followed by an expansive outline of New Look in the UK. Trends will be highlighted and an assessment of the key strategic issues made before looking at the marketing implications for New Look.

In order to offer some effective strategy, an in-depth analysis of the industry and competitive environment will be led; opportunities and threats will be considered from the clothing industry and strengths and weaknesses will be combined to generate an option for an Integrated Marketing Communication solution.

New Look operates in a challenging market due to the fact consumers are becoming always more demanding. According to a study conducted by Mintel (2017), 71% of young women aged 16-24 prefer to shop at retailers that sell frequently updated ranges. Furthermore, with the growth of social media tools (e.g. Instagram) and the rise of blogs, customers desire shopping immediately for the clothes inspired by celebrities.

Consumers seem also more cautious about fashion spending. Indeed, compared to the growth of 4.1% in spending clothing in 2016, last year the progress was only 3.1%. This can be justified by a decline in terms of consumers’ real incomes (Mintel, 2017).

On the other hand, non-specialist clothing retailers have managed to respond more effectively to changing consumer habits, such as supermarket chains that have seen the strongest growth (e.g. ASDA) (Mintel, 2017). A study conducted by Mintel (2017) shows that the main supermarket chains have become one of the main places to buy clothes (45% of in-store purchases and 21% online for fashion at grocery stores).

According to Mintel (2017), “The market size for clothing comprises men’s, women’s and children’s clothes through all retail outlets. It includes outerwear, underwear and fashion accessories, but excludes footwear and jewellery”.

In recent years, childrenswear has become significant, as in 2017 it increased its general market share by 14%. Children’s clothing has become a key point for many retailers in the industry (Mintel, 2017).

Despite an uncertain economic backdrop, according to a study conducted by Mintel (2017), the clothing retailing market will grow by 19% over the next five years to reach £69 billion by 2022 in UK.

This prediction was based on a statistical technique called “multivariate self-regression of time series”. It allows to obtain results through the “relationships between actual market sizes and a selection of key economic and demographic determinants (independent variables) in order to identify those predictors having the most influence on the market” (Mintel, 2017).

The sector is expected to grow in 2018 in UK, but also the cost of clothing is likely to rise. More details are available in the table below.
According to Mintel (2017), over half (51%) of female shoppers prefer to buy from retailers who often update the product range. 71% includes young women between 16 and 24 years. Instead, men are less interested and only 39% are involved in updating their clothing collection.

It has been proved by Mintel (2017) that most consumers, 63%, buy clothes every two or three months or less and customers seem to buy clothes less often than 2016. Fewer people than 2016, only 34% buy clothes once a month or more.

Young women remain the most frequent shoppers. In particular, the young millenarian women, unlike their male counterparts, are attentive to updates of clothing ranges and this means that they buy more frequently.

It is clear that young women but also young men are the segment of interest. In 2017, almost three fifths (59%) of men and women between the ages of 16 and 24 have purchased outwear. The 50% of men under 25 bought footwear in the last quarter of 2017 in the UK (Mintel, 2017).

in the table below, it is possible having a clearer idea of what the segment is interested in buying.

New Look Target Group involves young women aged between 16-35 years old. However, according to Mintel (2017), in recent years the brand has also looked to menswear. Indeed, a study shows that the company increased its share of the UK menswear market in 2016.
New Look aims to cater maternity, plus size and teens as well in order to diversify its offer (New Look, s.d.).

To stay competitive and meet consumer’s needs, an overview of the market trends is required. It provides insights and an evaluation of the clothing retailing industry. The PESTLE tool is employed to examine the external environment and it allows to identify the forces driving this industry. The results of the PESTEL analysis (appendix 1) enable to know what the opportunities and threats are, which are described below.
In this chapter, in-depth analysis competition will be led to have a greater clarity about the strengths and weaknesses of the brands in question. The direct New Look competitors are Primark, Topshop and H&M, while the main indirect competitor is ASOS. They have the same target audience in terms of age and styles; they are all women apparel clothing stores end they all have a similar starting price. Companies’ individual financial performance will be investigated, the marketing mix will be applied and the CBBE model will be used to examine advertisements of each brand.

It is possible to find a competitor analysis summary in the Appendix.

According to Statista (2018), New Look performance has deteriorated in the last years (Figure), which led to the company distinguishing itself from its competitors in order to boost its sales profit in the near future. In recent years, New Look has found difficult to compete in the United Kingdom. For this reason, it has decided to intensify its expansion in China where it could see a growth in sales (Mintel, 2017).
A study conducted by Mintel (2017) shows that New Look total sales declined 2.4% year-on-year.

Despite the decline in New Look total sales, the brand may launch campaigns to take advantage of the forecasted market growth and to increase sales and market share.

ASOS is considered one of the largest and most independent online fashion retailers in the United Kingdom. In contrast to New Look, experiencing strong growth and expansion at the international level, ASOS could see a short-term increase of 23.3% obtaining £ 1.4 billion in the UK, according to Mintel (2017).

Furthermore, Primark, known as one of the largest clothing retailers in Europe, has seen an increase of 11.3% in 2017 in the United Kingdom according to Mintel (2017), reaching £ 5.9 billion.

According to a study conducted by Mintel (2017), the brand claims to be the most popular among British consumers even when their incomes are under pressure. In fact, it was able to see a sales boom in 2017. It has the largest market share among all the competitor under examination.

Like New Look, the Swedish multinational fashion retailer is known for its fast-fashion clothing. But H&M was able to see a profit growth of 6.3% on an annual basis in the year to November 2016 (Mintel, 2017) and it reached 1.2 billion pounds in 2017 (Statista, 2017).

Finally, Topshop, which was considered one of the most innovative, has failed to keep pace with changes in how young women are shopping for fashion. Topshop saw sales fall 6 percent from £990.8m in 2016 to £ 933.6m in August 2017 (Mintel, 2017).

The elements of the marketing mix are the key in order to understand what makes strong the brands under analysis and find their weaknesses out as well.

Regarding the New Look Portfolio, it is possible to say it has a wide range of product. Indeed, the brand takes care of clothing for women, men and teens, offering to consumers clothing, shoes and boots, accessories and bags. There is also a home and gift section (New Look, s.d.).

In terms of Asos products, the Brand boasts more than 85,000 brands of women’s, men’s, footwear, accessories, jewelry and beauty products. One of the factors that makes the brand strong is that it launches between 2500 and 7000 new items per week. This is a big advantage over competitors because it is always updated. 60% of its product offer can only be found on ASOS and this makes the brand unique (Mintel, 2017).

In the case of Primark, it is possible to find an equally wide range of products in its stores. In fact, its portfolio includes clothing for men, women, children, shoes and bags, jewelry, homewares and beauty (Primark, s.d.).

H&M has a very wide range of products as well such as clothing, body care, beauty, hair care, home, textiles and decorative items, and so on. It offers cutting-edge fashion collections but above all, it focuses on the sustainability of the environment, making it the key point of the brand.

Topshop does not differ from its competitors at portfolio level. It also does sell some name brands (mainly footwear/sportswear) such as CK, Puma, Vans and so on (Mintel, 2017).

All five brands analyzed present affordable prices for consumers. Mostly with the fast-fashion strategy, they are not recognized as luxury brands. However, ASOS and Topshop include expensive products as well. In contrast, New Look, Primark and H&M have very low prices. Asos and New Look adopted the strategy “first price, right price”, in order to offer attractive prices at the entrance without having to take too many discounts later.

ASOS is the only one to differ from its competitor. In fact, the brand sells online only. New Look sells online and it boasts the largest number of stores in the United Kingdom (553), while Primark has the fewest stores in UK (174). Furthermore, Primark does not offer a transactional website but this fact does not appear to have damaged the company in the short-term; it can be assumed that it could become a problem in the medium to long-term, as online rivals such as ASOS continue to gain ground. The other two competitors have both several stores in UK and a transactional website.

New Look has a strong presence on social media such as Facebook, Instagram, Twitter and Pinterest. The brand finds a good compromise between its stores and the online channel. It also uses newsletters, vouchers and online promotions to engage consumers.
New look has always run many discounts, but in early 2018 it has decided to decrease them, leading to a decline in sales on its website, down 0,6% (Mintel, 2017).

ASOS is a fashion brand online only. Its online platform is the channel from which it gets profit. Promotions and news are always up to date. But the brand also uses digital platforms, magazines and communities to promote its services and products.

Furthermore, Asos boasts its first creative advertising campaign on Instagram Stories (Marketing Week, 2018), creating involvement among consumers and aiming to achieve the feeling level in the CBBE model. Indeed, rather than pushing obdurate sales messages or specific products, the campaign focused on brand awareness and entertains the public where it feels most comfortable. The message ASOS:” Next Level You, highlighting the brand’s focus on celebrating individual style” (Creative Review, 2018). The video reached 3 million people in the United Kingdom.

Regarding Primark, it avoids traditional advertising in favor of social media activities and using word of mouth. It has 5.5 million likes on Facebook, which is still growing and aims to reach the salience level in the CBBE model of Keller.

Additionally, H&M spend many efforts on promotion. It involves outdoor advertising, social media platform, magazines, the involving of fashion bloggers, TV by sponsoring many hits and trendy shows like MTV, word of mouth and so on (Marketing91, 2017).

H&M has also adapted to consumer demands: 58% of British shoppers, in fact, want more respect for the environment and 53% ask to know where their clothes are produced. H&M has made sustainability and environmental protection a strategic priority (Mintel, 2017).

“Close the Loop” is an example of innovative brand marketing (Uffpost, 2015). With the aim of promoting its mission to make fashion more sustainable, it has created one of the most different ad of all time in order to reach the judgments level in the pyramid.

Finally, Topshop run many promotions during the year. In particular, it focuses on discounting students which, through “UniDAYS”, offer a 10% discount. Topshop advertising is mainly present online and It has a strong presence on social media (Issu, 2017). The most used social platform for marketing communications by Topshop is Twitter. During London Fashion Week 2015, Topshop collaborated with Twitter and launched the #LIVETRENDS real-time campaign (Stackla, 2018) in which billboards were created in the main cities of the United Kingdom, each near a Topshop store. Topshop also aimed at the feeling level obtaining 3.8 million customers engaged.

After having done a brief analysis of some brand campaigns and analyzed their way of promoting the products, it is possible to summarize in the drawing below what the consumers perceive.

The following table summarises the strengths and weaknesses of the competitors in this analysis.

New Look was bought by Brait SE in 2005 for £ 780 million. But taking a step back in history, the brand was founded by Tom Singh in 1969 in Taunton and was owned by the private equity groups Apax Partners and Permira. Initially it operated as a single fashion store and then expanded rapidly over the years. Brait SE, besides owning New Look today, is also involved in the Virgin Active health chain, as well as having a minority stake in Iceland Foods. New Look now operates on over 900 stores worldwide, including Belgium which was the first store opened abroad, France, Netherlands, the Republic of Ireland, Romania, Malta, Malaysia, Korea South, Singapore, Thailand, Indonesia, United Arab Emirates, China, Germany, Russia, Bahrain, Saudi Arabia, Azerbaijan and Poland. It also has a staff of over 18,000 people (Wikipedia, 2018). Brand vision, promises and values can be seen in the figure below.

As mentioned previously, the New Look Portfolio provides a wide range of product. Indeed, the brand takes care of clothing for women, men and teens, offering to consumers clothing, shoes and boots, accessories and bags. There is also a home and gift section (New Look, s.d.).
Using the Ansoff’s matrix, parts of the New Look portfolio can be analyzed, and in order to understand how the company is positioned in the quadrants, innovative elements and salient points will be included.

Given the above matrix, it is possible to draw conclusions about the position of New Look in the various quadrants. It indicates that the brand is located both in the consolidation quadrant and in the new market development, given by the ambitious objectives of the company expanding abroad.

For a better understanding of the perception that consumers have of the brand, the application of the wheel brand becomes crucial. Attributes can easily be identified as a clothing brand, which also offers accessories, beauty products and home accessories at cheap prices. New Look puts the consumer at the center of its values, in order to help choice of style of the consumer and make easy its purchase decision. The framework personality of Aaker (1997) can be applied to determine the personality of the New Look brand. The New Look personality framework is the exciting. Later, advertising campaigns will be analyzed and this point will be highlighted.

According to a study conducted by Mintel (2017), at the end of March 2017, New Look’s revenue decreased by 2.4%. More generally, total sales in the English market where New Look operates in decreased by 5.2% and like-for-like sales fell 6.8%.

In contrast, its functional transactional website allowed the brand to grow sales by 14.3%. There is an efficient Delivery Pass scheme that allows customers who buy online for free annual delivery at a fixed fee. Third-party e-commerce sales also increased 30.9%, after the group expanded the number of wholesale ranges offered to partners.

According to New Look, the fall of 44.1% of net profit is due to the costs associated with the expansion of its menswear business, as well as the opening of stores in China and higher discounts expected in a fashion market in the UK (Mintel, 2017).

From the company’s point of view, the continuing decline in sales of 2018 of £ 72.3 million in the UK is due to the fact that it has shifted its focus away from established strengths (with wide appeal and the highly attractive pricing architecture). It also seems to have over-committed to stock ahead of a season. This caused loss of their flexibility and as they tried to pursue a younger and more alien client, they lost sight and pride of the inclusiveness and value for money that have been the unique selling point (New Look, s.d.).

New Look’s financial ratios have been analyzed in the Appendix below.

In order to better understand the situation of the brand and its directions, it is necessary to concentrate on its marketing activities by focusing on communications. By deepening its most significant advertising campaigns, it is possible to evaluate its performance and objectives.

The New Look strategy that has always made the strong brand is inclusiveness and value for money. Moreover, one of the key points for New Look is to implement feeling strategies on digital, outdoor and in-store channels, involving its target market as much as possible. As can be seen later in the report analyzing its campaigns, fun and excitement are at the center of New Look’s message to create a strong engagement with the consumer.

In 2016, New Look collaborated with Brass for its new promotional campaign.

The key message of the campaign is: “Shop styles, get prizes” with £ 1 million in style prizes to be won. The main objective was to have a greater involvement by customers in interacting in-store, online and on mobile devices.

Brass was instructed to increase transaction levels; it has developed a marketing campaign that has driven customers to spend £ 30 or more to photograph their receipt and upload, e-mail or text to receive a promotional code.

Thanks to a POS in-store and to the promotional website created by Brass, New Look’s multi-channel campaign has met with enormous success adding fun and engagement.

During the Christmas season in 2016, New Look has created a unique multi-channel campaign, #AngelsXRobots, to launch its range. To guide mass awareness, New Look turned to Twitter, in order to maintain a target audience of 16-34 years.

Videos were used to capture the attention throughout the campaign. It put its #AngelsXRobots movie in the chronology of people with First View, offered a behind-the-scenes story behind the campaign, and shared the key aspect of the party for the season. Interactive GIFs have also been used to create excitement and fun in order to achieve the Feeling Level (Marketing Twitter, 2017).

The most recent advertising campaign, launched for spring/summer 2018, was created by MediaCityUK based film production company Chief, with the collaboration of Saturday’s television presenter and singer Rochelle Humes.

The campaign was developed in Morocco and consists of 60sec, 30sec and 15sec movies in online streaming, outdoors, social and in-store.
Creativity was settled by the internal New Look team with the aim of capturing the spring and summer atmosphere with “genuine fun and excitement”. Also in this case it is possible to confirm that the Brand aims to involve the consumer through the feeling, the fun and the excitement.

By applying the Keller CBBE framework (2009) to each of the above campaigns it is possible to draw conclusions. Each campaign seems to be addressed to the Feeling level, since the basis of the advertising messages was involvement, excitement and fun. The ability to engage with content, to win prizes and interact with the brand was an effective way to achieve the resonance as well.

From the internal analysis of New Look, it is possible to define the strengths and weaknesses of the brand chosen (See figure below).
The SWOT analysis, generated by external factors (identified by the PESTEL analysis) and by an internal analysis, allows clarifying the strengths, weaknesses, opportunities and threats involved. From it, it is possible to generate strategic options for New Look and better understand the directions it can take.

Four strategic options were developed based on the New Look SWOT analysis. The conclusions are shown below.

From the SWOT analysis, it is possible to derive four options that New Look could adopt in order to bring itself in a better position compared to its competitors. The Ansoff’s matrix is useful to understand which of the options is the most relevant.
To achieve a competitive advantage, the creation of a campaign to promote plus-size has been established. The increase of obesity in the United Kingdom, which is expected to affect half of the British population in 2050, can be considered a great opportunity in the clothing market. Through its very strong online tools, New Look will launch new products emphasizing style in plus sizes, attracting new consumers and consolidating old ones through loyal programs. There will be a unique product offering of the brand with the collaboration of curvy fashion bloggers.

After the analysis carried out for New Look, it was established that the Brand must remain in the consolidation phase, since its financial situation does not recommend radical changes.

The goal of New Look is to consolidate its target market, in particular young women with big sizes. This will be done through loyal programs and through online channels, trying to implement social platforms. The aim will be to achieve the resonance. The second objective will be to acquire new consumers through the online channel and in-store experience (same segment).

18.7.2018

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